Full Circle Asset Management, a discretionary fund manager that recently lost its appeal to review a compensation order by the Financial Ombudsman Service (FOS), has been declared in default by the Financial Services Compensation Scheme (FSCS).
Full Circle Asset Management
The firm went into administration in 2017 after losing a court case brought by a client. It had 24 pending claims against it as of March 2018. It was then declared in default in April 2018 alongside seven other firms. These included Intelligent Financial Planning, Strategic Wealth UK and Bright Financial Partnership.
What went wrong?
Full Circle Asset Management provides clients with model portfolio discretionary investment services. It ran into difficulties when several clients lodged complaints against the company with the FOS. One such client, a retiree in her 60s, invested £450,000 with the firm and lost £90,000 in the first 15 months.
In this case the Ombudsman decided that, despite the client having completed an attitude to risk and loss assessment, the client was owed redress. The is because the proportion of unsuitably risky investments was far too high and the portfolio was not set up to suit the needs of the client. Also, the information provided to the client was too technical for her to sufficiently understand. On this basis, the FOS ruled that the client was entitled to compensation of up to £100,000.
Full Circle appealed the decision, stating that the portfolio consisted of investments that matched their client’s risk profile and arguing that they did not provide a personal recommendation for the investments undertaken. While an external review requested by the FCA concluded that the investments were of an appropriate risk level, the Ombudsman maintained that they didn’t meet the overall suitability for the client’s individual circumstances.
The High Court upheld the Ombudsman’s decision, rejecting Full Circle’s challenge for a judicial review.
What happens now?
This declaration of default means the FSCS is satisfied that Full Circle Asset Management is unable to pay the claims for compensation made against it. This means that the clients who have grounds for a claim may now be able to get some or all of their lost investment funds back by applying to the FSCS.
Financial mis-selling compensation
If you have been advised by your financial advisor or a fund manager to make investments you now think were unsuitable for your personal circumstances, you may be eligible for compensation.
You can seek redress if:
- The investments made were of an unsuitable risk level for your investor profile
- The investments were unsuitable for your personal circumstances
- The risks were not fully explained and/or the information provided was too technical or complex
If any of the above criteria apply to you, our team of experienced solicitors at APJ can help investigate grounds for a claim. Simply give us a call or fill out our contact form and tell us about your situation to get started.